Technology

Will 'No Tax on Tips' fix restaurants’ labor challenges?

Tax relief may help workers feel a bit more supported by the government and potentially add an extra sense of financial security, but it won't solve the core issue that many restaurant jobs still don't feel worth keeping. This can be addressed with the tech solutions many foodservice brands already use.

Photo: Gemini

December 10, 2025 by Oli Ostertag — GM of Operator Cloud, PAR Technology

The current White House administration's "No Tax on Tips" bill is on the minds of restaurant operators everywhere. The idea is that starting in 2028, tipped wages would no longer be taxed. More take-home pay is a win, especially in an industry where tips often carry the bulk of someone's income. The National Restaurant Association has welcomed the move, and many folks in the industry see it as a way to give servers a little more breathing room in their paychecks.

But if you zoom out from the headlines and take a closer look at what's actually driving restaurant turnover, one thing becomes clear: This policy alone won't be the end-all solution operators are hoping to drive employee retention.

The real problem isn't taxes

Fast casual restaurants across the U.S. continue to face one of the highest turnover rates in the economy. According to PAR's 2025 Industry Report, turnover sits at 122%. That number has come down slightly in recent years, but it still signals a lot of disruption.

Most in-store foodservice employees stay only 3 to 5 months. For operators, that means constant recruiting, training and reshuffling just to maintain a basic level of service. It's expensive, time-consuming and exhausting for both management and staff.

Tax relief may help workers feel a bit more supported by the government and potentially add an extra sense of financial security, but it won't solve the core issue that many restaurant jobs still don't feel worth keeping. This can be addressed with the tech solutions many foodservice brands already use.

Why workers don't stay long

In too many fast casual restaurants, employee experience still comes second. Schedules change last minute, training is rushed and recognition is inconsistent. For employees juggling other jobs, school or family responsibilities, the instability becomes too much.

Some brands have accepted this as normal, but others are starting to challenge that mindset. Operators like In-N-Out and Chick-fil-A are often cited as standouts where employees tend to stay longer because the environment supports long-term success. In addition to pay, managers are trained to lead well, expectations are clear, team members know they're valued, and they're treated with the same care and consistency that brands aim to give customers.

It's about creating a workplace where people know what to expect and feel good showing up.

Why the policy has limits

There's been a lot of buzz around the "No Tax on Tips" bill, but a few caveats get overlooked in the conversation.

One, it excludes service charges, which are becoming more common as some operators shift away from traditional tipping models. That exclusion leaves out a growing segment of restaurants and their workers.

And secondly, the measure does nothing to support non-tipped roles like dishwashers, line cooks or prep teams who often face the greatest instability and the least recognition.

Danielle Nierenberg, president of the nonprofit Food Tank, said the policy "doesn't actually fix any of the systemic issues" behind restaurant labor instability. The bigger fixes are sitting inside the four walls of most restaurants right now — often in tools operators already use every day.

Use what you already have

Most restaurants don't need to overhaul their entire tech stack. They just need to get more out of what they already use.

Modern labor management systems can do more than fill shifts. They can forecast churn risks, show which employees perform best under pressure and help managers build smarter, more balanced schedules that actually match demand. POS and scheduling data can be used together to adjust staffing patterns around sales trends. Payroll systems can integrate with onboarding tools to create smoother starts for new hires.

These relatively minor adjustments add up to something that feels different for both the employee and the guest. When the team knows what's coming and feels taken care of, the whole operation becomes more stable.

A growing number of brands are proving what's possible when those systems are put to work in smarter ways.

Real examples of progress

Instead of waiting for policy to solve their staffing struggles, some operators are already rethinking what it means to build a team that lasts:

• MAD Greens, a fast casual salad chain, rolled out on-demand pay access which gave employees more control over when they get paid, helped ease financial stress, and contributed to stronger retention rates across multiple locations
• Blackbird Bakery, a busy artisan bakehouse in New York, focused on the day-to-day realities of team burnout. By streamlining scheduling, clarifying job roles and eliminating unnecessary friction during shifts, they saw a measurable drop in turnover and a boost in team morale.
• Hawaiian Bros, a fast-growing island-inspired concept with dozens of locations, used a platform to unify its hiring, onboarding and performance management systems. That integration helped the brand scale quickly without sacrificing culture or consistency — two things that are hard to hold onto when teams are stretched thin.

What ties all of these brands together is a focus on employee experience. They've moved beyond pay-only solutions and started investing in tools that make the job feel more predictable, more organized, and more rewarding.

Building jobs worth keeping

Front-of-house workers might see a boost from this tax change, but the labor crisis reaches far beyond the server station. The kitchen staff and behind-the-scenes teams that power every shift are still facing high turnover and low recognition.

Operators have more influence than they think. Better scheduling, stronger training and smarter use of existing tools can transform jobs that feel temporary into jobs that feel reliable.

About Oli Ostertag

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Oliver "Oli" Ostertag, General Manager of Operator Cloud at PAR Technology, has had many roles at PAR, including running the company's international and business operations functions. Prior to joining PAR, he was a corporate attorney representing large-cap private equity sponsors in multi-jurisdictional public and private M&A in the technology, financial services, and consumer goods sectors. He also previously ran operations at NearSt, a London-based e-commerce company.

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